CNBC's "Fast Money" Stocks Sink as Fed Signals Fewer Cuts 12/18/24
7 snips
Dec 18, 2024 
Loretta Mester, former Cleveland Fed president and CNBC contributor, shares her expertise on the tremors shaking the stock market after the Fed's quarter-point rate cut. She discusses why Powell is signaling fewer cuts in 2025, impacting inflation expectations and investor sentiment. The conversation dives into recent market reactions, highlighting the momentum trades that are faltering and the implications for year-end investing. Mester also unpacks the complexities of prolonged higher interest rates on various sectors, including tech and housing.
AI Snips
Chapters
Transcript
Episode notes
Hawkish Pause by the Fed
- The Federal Reserve lowered its benchmark lending rate by 25 basis points.
- They signaled fewer rate cuts in 2025 than previously anticipated, spooking the markets.
Tech Stock Vulnerability
- Tech stocks experienced a significant decline when the Fed first signaled interest rate hikes in late 2021.
- Further cuts being off the table necessitates reevaluating stock valuations, especially considering the strengthening dollar and rising yields.
Market Overreaction?
- The market's reaction to the Fed's decision is likely a knee-jerk reaction, as the bond markets had been pricing in a potential pause or fewer cuts.
- If the economy remains strong and prices stay stable despite higher rates, it might not negatively impact equity markets.